Japan's central bank chief on Friday dismissed a call for an interest rate cut in coordination with the US Federal Reserve, saying that current policies were enough to keep the economy firm. Central banks' job is to 'select appropriate policies by analysing outlooks of each country's economy and prices even when there is a growing sense of crisis,' Bank of Japan governor Toshihiko Fukui said in parliament. He made the remark in reply to a question by a ruling party lawmaker who argued that Japan's central bank should immediately follow this week's emergency US rate cut.

On Tuesday, the Bank of Japan's policy board unanimously kept the benchmark cost of borrowing at 0.50 per cent, already by far the lowest among the world's major economies. Later Tuesday the US central bank took surprise action and cut its key rate by an unprecedented three quarters of a percentage point amid increasing fears of a recession. 'The Bank of Japan should have gone for a rate cut in coordination, given this emergency, plunges in stock prices and a clear US economic slowdown which would affect Japan's economy,' lawmaker Kozo Yamamoto charged.

Fukui refuted his charge, arguing there is a 'high probability that the Japanese economy will continue its gradual expansion towards the next fiscal year from April with stable prices.' 'We are carrying out financial policies strongly confident that we will be able to have a stable economy ... by continuing to provide the current accommodative financial environment for the time being,' Fukui said. The Bank of Japan until 2006 kept the unusual policy of keeping interest rates effectively at zero.